Interim Results

RNS Number : 3559A
Gooch & Housego PLC
07 June 2016
 



 

For immediate release

7 June 2016

GOOCH & HOUSEGO PLC

INTERIM RESULTS FOR THE SIX MONTHS ENDED 31 MARCH 2016

Gooch & Housego PLC (AIM:GHH) ("Gooch & Housego", "G&H", the "Company" or the "Group"), the specialist manufacturer of optical components and systems, today announces its interim results for the six months ended 31 March 2016.

Financial Highlights

Period ended 31 March

HY2016

HY2015

Revenue

£38.4m

£38.9m

Adjusted profit before tax1

£5.6m

£6.3m

Adjusted basic earnings per share 1

17.0p

19.3p

Net cash

£12.3m

£11.9m

Statutory profit before tax

£3.5m

£5.1m

Basic earnings per share

10.8p

15.6p

Interim dividend per share

3.3p

3.0p

1 Adjusted for amortisation of acquired intangible assets, restructuring costs and site closure costs.

Highlights

·    First half performance as expected

·    Full year trading remains in line with our expectations

·    Robust order book of £39.1 million as at 31 March, a 13.1% increase on the same time last year

·    Mixed markets

Industrial laser market improved in Q2

Strong performance from telecommunications and fibre sensing products

Aerospace & defence markets lower due to programme timings

·    Continued investment for the future - £5.6 million invested in the Group's facilities and equipment and £3.5 million in R&D and new products

·    Interim dividend increased to 3.3p (2015: 3.0p)

 

Mark Webster, Chief Executive Officer of Gooch & Housego PLC, commented on the results:

 "G&H is well-positioned to benefit from improving market conditions and has the capacity to respond to increasing demand. Our commitment to diversification has enabled us to navigate a challenging period at the beginning of the year and still be on track to deliver our full year expectations.

We remain committed to our strategy of diversification and moving up the value chain whilst continuing to invest in our continuous improvement programme, which will underpin future performance.''

For further information please contact:

Gooch & Housego PLC

Mark Webster / Andrew Boteler

01460 256 440

Buchanan

Mark Court / Sophie Cowles

020 7466 5000

Investec Bank plc (Nomad & Broker)

Patrick Robb / David Anderson

020 7597 4000



Notes to editors

 

1.     Gooch & Housego is a photonics technology business headquartered in Ilminster, Somerset, UK with operations in the USA and Europe. A world leader in its field, the company researches, designs, engineers and manufactures advanced photonic systems, components and instrumentation for applications in the Aerospace & Defence, Industrial, Life Sciences and Scientific Research sectors. World leading design, development and manufacturing expertise is offered across a broad range of complementary technologies.

 

2.     This announcement contains certain forward-looking statements that are based on management's current expectations or beliefs as well as assumptions about future events.  These are subject to risk factors associated with, amongst other things, the economic and business circumstances occurring from time to time in the countries and sectors in which G&H operates.  It is believed that the expectations reflected in these statements are reasonable but they may be affected by a wide range of variables which could cause actual results, and G&H's plans and objectives, to differ materially from those currently anticipated or implied in the forward-looking statements.  Investors should not place undue reliance on any such statements. Nothing in this announcement should be construed as a profit forecast.

 



 

Operating and Financial Review

Performance Overview

The Company saw a steady recovery in the second quarter after a slower than expected start to the year, characterised by sustained demand for our products. This move from a weak first quarter to a much stronger Q2 is demonstrated by the 57% increase in order intake between the two quarters. Half year revenues were only marginally lower than those of 1H 2015, which was a record half year for the Company.  We continue to expect a good second half trading performance driven by orders for our fibre business, in particular high reliability undersea fibre components, fibre based satellite communications and fibre optic sensing, in addition to a recovering microelectronics sector.

The increase in our interim dividend by 10% reflects our confidence in the business going forward and is underpinned by our strong balance sheet.

Six months ended 31 March

2015


£'000

% of total

Industrial

65%

57%

Aerospace & Defence

21%

27%

Life Sciences

10%

11%

Scientific Research

4%

5%

 

Group revenue for the half year was £38.4 million, a fall of £0.6 million, or 1% over the comparative period last year. On a constant currency basis, revenue was 5% lower. 

Order intake in the first half of the year has been encouraging.  The order book at 31 March 2016 was £39.1 million (31 March 2015: £34.6 million) and the Company has booked £41.1 million in orders since 1 October 2015.

Products and Markets - Industrial

Gooch & Housego's principal industrial markets are industrial lasers, telecommunications, metrology, sensing and semiconductor manufacturing. Industrial lasers are used in a diverse range of precision material processing applications ranging from microelectronics to automotive.

Overall, business in our industrial market was good in the first six months of the year. Overall, sales of products into our industrial markets in the six months to 31 March 2016 were 11% higher compared with the equivalent period last year.

The industrial laser market was weaker in the first half of the year driven by lower demand from China for lasers used in microelectronic manufacturing.  The shortfall in demand in our industrial laser market was more than offset by increases in our fibre-optic sensing and telecommunications markets.

In fibre-optic sensing G&H's Fibre-Q products continue to be adopted and lead the way in this fast growing market place, with the result that the Company is now benefitting from positive market trends in fibre optic sensing and generating meaningful revenue streams.



 

 

In telecommunications, whilst sales of lithium niobate wafers for modulation applications continue to be strong, the significant growth has come from demand for fibre optic components for under-sea telecommunications applications. We expect this growth to continue to strengthen throughout this year and into next, as non-traditional companies enter this market and look to lay their own undersea networks. The overall telecommunications market segment increased by 18% compared with the equivalent period last year.

Products and Markets - Aerospace and Defence

Product quality, reliability and performance are paramount in this sector and that plays to G&H's strengths, along with our commitment to provide value. We have strong, well established positions in target designation and range finding, ring laser and fibre optic gyroscope navigational systems, infrared and RF countermeasures and space photonics.

The Aerospace & Defence market for G&H is characterised by high-value, long-term programmes involving the main US and European defence contractors.  G&H's precision optics and acousto-optic technologies have contributed most to the Aerospace & Defence markets in the last six months, with navigation, range finding and target designation being the principal applications.

This sector was down for G&H during the first six months. The major part of this reduction is a direct function of order and programme timing.  This sector is expected to recover in the second half of this financial year.  Moreover, with the continued adoption of technologies which play to G&H's core capabilities, together with the investment that the business has made in business development and R&D in this market sector, we continue to believe there is strong growth potential for us going forward.

Products and Markets - Life Sciences

G&H's three principal Life Sciences revenue streams are derived from diagnostics (fibre-optic modules for optical coherence tomography (OCT) applications), surgery / treatments (electro-optics and acousto-optics for lasers) and biomedical research (acousto-optics for microscopy applications). In each application area the Company is making steady progress in moving up the value chain and is currently selling sub-systems as well as components to several larger customers.

This market sector fell by 9% in the six months to 31 March 2016, compared with the equivalent period last year, driven mainly by lower demand requirements from two major customers.

The principal commercial application of OCT systems is retinal imaging, and G&H continues to be the leading provider of fibre optic solutions (products and design services) to this industry.  Gooch & Housego considers OCT to be a growth technology and is investing both in the development of new products and in keeping its current products cost competitive.

Products and Markets - Scientific Research

The key application in Scientific Research is laser inertial confinement fusion ("laser fusion"), where lasers are used to create the conditions found in the core of a star. In addition to pure research in high energy and plasma physics, these vast laser systems are being used to investigate whether this technology could provide clean, carbon-free energy to reduce dependency on fossil fuels. G&H is continuing to supply crystals, precision optics and fibre components for new system construction and expects ongoing business to service replacement and maintenance requirements.



 

Strategy

G&H's strategy is based around a continued commitment to the twin pillars of diversification and moving up the value chain. A more vertically integrated and balanced business, which is more robust and less exposed to the cyclical nature of some of our core products is one of the key aims. The progress to date against this goal has enabled us to navigate a challenging period at the beginning of the year and still be on track to deliver our full year expectations, despite slower than expected sales in the first quarter. Further investment in R&D and market focused business development aim to provide the momentum that will drive rates of organic growth above historical norms. In addition management continues to actively look for strategic partnerships and acquisitions.  

R&D: In the first six months of the current financial year, G&H invested £3.5 million in research & development.  This represents 9.1% of revenue and is 8% higher than the same period last year (2015: £3.2m).  G&H's continued commitment to investing in targeted R&D programmes is bearing fruit, with a record thirteen new products launched at the Photonics West trade show in February 2016.

Diversification:  G&H seeks to develop, through R&D and acquisition, a presence in new markets that offer the potential for significant growth as a result of their adoption of photonic technology, whilst also reducing exposure to cyclicality in any particular sector. We will continue to invest in all of our key sectors in order to ensure we maintain a balanced portfolio and over time achieve a critical mass in Life Sciences and A&D, as well as the Industrial sector.

Moving up the Value Chain: G&H seeks to move up the value chain to more complex sub-assemblies and systems through leveraging its excellence in materials and components, and by providing photonic design and engineering solutions for our customers. This will enable G&H to transition from a components supplier to a solutions provider.   A significant proportion of our business in the Aerospace & Defence market now comes from the sale of sub-systems rather than discrete components.

As well as continuing to develop a leadership position in space photonics, the Systems Technology Group is actively engaged in near-market developments in OCT, fibre lasers and fibre optic sensing as the Company leverages its components expertise to move up the value chain into systems.

Operations

In 2015 G&H took the decision to re-locate its Palo Alto facility to nearby Fremont.  This decision was based on a landlord change which threatened the long term viability of Palo Alto as a location.  This move is now complete and has provided a much improved facility and room for growth at a similar rent.  The move itself took longer than expected due to regulatory licence and landlord contractual issues.  The delay contributed an additional £0.9 million in costs in the first six months of 2016. The Torquay site has recently been expanded and upgraded allowing us to manage the capacity challenges that come with a 2.5 fold increase in demand for Hi-Rel undersea fibre couplers. Further investment in capacity at this site will continue throughout 2016.

Our continuous improvement programme is proceeding well. Operationally the move to a lean manufacturing environment across all of our sites is set to deliver efficiency savings in 2016 and the drive for fewer more productive R&D projects combined with enhanced business development support has started to deliver an increased number of product opportunities.

Acquisitions

G&H will continue to evaluate acquisition opportunities that have the potential to accelerate delivery of the Company's strategic objectives. Having established a presence in its target markets, G&H is now focussing on moving up the value chain in each of those markets. Whilst the business will continue to evaluate bolt on businesses in our core component technologies, continued strong focus is being placed on acquisition opportunities that enhance the Company's ability to wrap electronics and software around core photonic products to yield system-level solutions.

 

RECONCILIATION OF ADJUSTED PERFORMANCE MEASURES

 


Operating Profit

Net finance costs

Taxation

Earnings

per share

Half Year to 31 March

2016

£000

2015

£000

2016

£000

2015

£000

2016

£000

2015

£000

2016

pence

2015

pence

Reported

3,560

5,248

(33)

(148)

(913)

(1,363)

10.8

15.6

Amortisation of acquired intangible assets

733

802

-

-

(191)

(209)

2.2

2.5

Restructuring costs

223

417

-

-

(58)

(108)

0.7

1.2

Fremont site move costs

883

-

-

-

(230)

-

2.7

-

Abortive transaction fees

194

-

-

-

(50)

-

0.6

-

Adjusted

5,593

6,467

(33)

(148)

(1,442)

(1,680)

17.0

19.3

 

As expected, adjusted profit before tax was £5.6 million, down 11.1% on the prior year (H1 2015: £6.3 million). Margins were impacted by the product mix and the one off costs associated with the delayed Fremont site relocation.

Cash Flow and Financing

 

In the six months to 31 March 2016 G&H generated cash from operations of £2.9 million, compared with £5.8 million in the same period of 2015.  1H 2016 operating cash flows include a net cash outflow of £0.9 million relating to the relocation of the Palo Alto facility.

As part of the preparations for moving its Palo Alto site to nearby Fremont, the business built inventory levels to satisfy expected customer requirements while the new facility was brought on line.  Since the completion of the move, inventory levels at our new Fremont site are $1.7 million lower than at 30 September 2015 as the strategic inventory build has been unwound.  At the same time the business has invested in inventory at our Torquay facility in order to meet the demanding customer ramp programmes. The utilisation of the Fremont strategic inventory build, together with the impact of exchange rates and the working capital investment at our Torquay facility, have resulted in a net inventory increase of £0.3 million to £16.3 million since the year end.

Capital expenditure on property, plant and equipment was £5.6 million in the period (2015: £1.1 million). The main fixed asset additions were in relation to the Fremont facility move and expanding our Torquay site. G&H has completed the upgrade and expansion of two of its key sites in the last six months. In addition the Company has commenced the modernisation of its Cleveland facility. These investments, together with our continued commitment to the principles of lean manufacturing are vital to improved manufacturing performance in the medium term.

The Company's net cash position remains robust at £12.3 million, down from £17.3 million at 30 September 2015, following the investment in our Fremont and Torquay facilities.

Staff

 

The Company workforce reduced from 700 at 30 September 2015 to 665 at the end of March 2016. This reduction was facilitated by the efficiency measures that the business has introduced in the last twelve months.    

Dividends

 

The Directors have declared an interim dividend of 3.3p per share (2015 : 3.0p per share), a 10% increase on the prior period, which is reflective of the Directors' confidence in the business going forward and is underpinned by our strong balance sheet.  This will be payable on 18 July 2016 to shareholders on the register as at 24 June 2016.

Prospects and outlook

 

G&H remains committed to the twin pillars of our strategy, namely diversification and moving up the value chain. Current mixed market conditions have emphasised the value of having a more diversified business where the strong performance of our fibre business has allowed us to ameliorate some of the first half impact.

G&H is well-positioned to benefit from improving market conditions and has the capacity to respond to increasing demand. Our commitment to diversification has enabled us to navigate a challenging period at the beginning of the year and still be on track to deliver our full year expectations.

The Company will continue to pursue its strategy and invest in our continuous improvement programme prioritising further operational excellence, enhanced business development in our key markets and a more focused R&D portfolio; all of which will underpin our future performance.

 

Gareth Jones               Mark Webster                          Andrew Boteler                      

Chairman                     Chief Executive Officer            Chief Financial Officer            

 

 

7 June 2016                                         



Unaudited interim results for the 6 months ended 31 March 2016

 

Group Income Statement



Note

Half Year to
31 Mar 2016
(Unaudited)

Half Year to
31 Mar 2015
(Unaudited)

Full Year to

30 Sep 2015
(Audited)



£'000

£'000

£'000

Revenue

5

38,361

38,945

78,702

Cost of revenue


(25,252)

(23,385)

(47,659)

Gross profit


13,109

15,560

31,043

Research and Development


(2,889)

(2,921)

(5,712)

Sales and Marketing


(2,976)

(2,687)

(5,626)

Administration


(5,247)

(5,723)

(10,353)

Other income and expenses


1,563

1,019

942

Operating profit

5

3,560

5,248

10,294

Net finance costs


(33)

(148)

(188)

Profit before income tax expense


3,527

5,100

10,106

Income tax expense

6

(913)

(1,363)

(2,647)

Profit for the period


2,614

3,737

7,459

Earnings per share

 

7

10.8p

15.6p

30.9p

 

Reconciliation of operating profit to adjusted operating profit:



Half Year to
31 Mar 2016
(Unaudited)

Half Year to
31 Mar 2015
(Unaudited)

Full Year to       30 Sep 2015
(Audited)



£'000

£'000

£'000

Operating profit


3,560

5,248

10,294

Amortisation of acquired intangible assets


733

802

1,604

Restructuring costs

 


223

417

1,204

Fremont site move costs


883

-

-

Abortive transaction fees


194

-

-

Adjusted operating profit


5,593

6,467

13,102

 



 

Group Statement of Comprehensive Income

Half Year to
31 Mar 2016
(Unaudited)

Half Year to
31 Mar 2015
(Unaudited)

Full Year to       30 Sep 2015
(Audited)


£'000

£'000

£'000

Profit for the period

2,614

3,737

7,459

Other comprehensive income




Fair value adjustment of interest rate swap net of tax

-

16

21

Currency translation difference

 

2,289

2,871

1,800

Other comprehensive income for the period

 

2,289

2,887

1,821

Total comprehensive income for the period

4,903

6,624

9,280



Unaudited interim results for the 6 months ended 31 March 2016

 

Group Balance Sheet


31 Mar 2016
(Unaudited)

31 Mar 2015
(Unaudited)

30 Sep 2015
(Audited)



£'000

£'000

£'000

Non-current assets





Property, plant and equipment


29,645

24,031

24,915

Intangible assets


21,074

21,312

20,155

Deferred income tax assets


2,382

2,797

2,552



53,101

48,140

47,622

Current assets





Inventories


16,269

16,304

16,013

Income tax assets


800

401

854

Trade and other receivables


15,532

15,690

14,394

Cash and cash equivalents


17,810

17,240

22,556



50,411

49,635

53,817

Current liabilities





Trade and other payables


(11,675)

(13,591)

(14,059)

Borrowings


(10)

(5,349)

(39)

Income tax liabilities


(312)

(96)

(411)

Provision for other liabilities and charges


(380)

(389)

(342)



(12,377)

(19,425)

(14,851)






Net current assets


38,034

30,210

38,966






Non-current liabilities





Borrowings


(5,482)

-

(5,189)

Deferred income tax liabilities


(3,169)

(2,478)

(3,032)



(8,651)

(2,478)

(8,221)






Net assets


82,484

75,872

78,367






Shareholders' equity

Capital and reserves
attributable to equity shareholders





Called up share capital


4,852

4,812

4,818

Share premium account


15,530

15,515

15,530

Merger reserve


2,671

2,671

2,671

Hedging reserve


-

(5)

-

Cumulative translation reserve


3,319

2,101

1,030

Retained earnings


56,112

50,778

54,318

Equity Shareholders' Funds


82,484

75,872

78,367

 



Unaudited interim results for the 6 months ended 31 March 2016

 

Statement of Changes in Equity

Share
capital
account
£000

Share
premium
account
£000


Merger
reserve
£000

 

Hedging

reserve
£000

 

Retained

earnings
£000

 

Total

equity

£000

 

At 1 October 2014

4,774

15,420

2,671

(21)

47,093

69,937

Profit for the period

-

-

-

-

3,737

3,737

Other comprehensive income for the period

-

-

-

16

2,871

2,887

Total comprehensive income for the period

-

-

-

16

6,608

6,624

Dividends

-

-

-

-

(1,101)

(1,101)

Proceeds from shares issued

38

95

-

-

(35)

98

Fair value of employee services

-

-

-

-

220

220

Tax credit relating to share option schemes

-

-

-

-

94

94


38

95

-

-

(822)

(689)

At 31 March 2015 (unaudited)

4,812

15,515

2,671

(5)

52,879

75,872








At 1 October 2015

4,818

15,530

2,671

-

55,348

78,367

Profit for the period

-

-

-

-

2,614

2,614

Other comprehensive income for the period

-

-

-

-

2,289

2,289

Total comprehensive income for the period

-

-

-

-

4,903

4,903

Dividends

-

-

-

-

(1,254)

(1,254)

Proceeds from shares issued

34

-

-

-

(34)

-

Fair value of employee services

-

-

-

-

319

319

Tax credit relating to share option schemes

-

-

-

-

149

149

At 31 March 2016 (unaudited)

4,852

15,530

2,671

-

59,431

82,484






















 



Unaudited interim results for the 6 months ended 31 March 2016

 

Group Cash Flow Statement




Half Year to
31 Mar 2016
(Unaudited)

Half Year to
31 Mar 2015
(Unaudited)

Full Year to 30 Sep 2015
(Audited)



£'000

£'000

£'000

Cash flows from operating activities





Cash generated from operations


2,911

5,771

14,692

Income tax paid


(465)

(692)

(1,067)

Net cash generated from operating activities


2,446

5,079

13,625

Cash flows from investing activities





Purchase of property, plant and equipment


(5,639)

(1,090)

(3,053)

Sale of property, plant and equipment


-

631

635

Purchase of intangible assets


(654)

(337)

(793)

Interest received


20

11

26

Net cash used in investing activities


(6,273)

(785)

(3,185)

Cash flows from financing activities





Drawdown of acquisition borrowing facility


-

5,168

5,168

Repayment of borrowings


(29)

(8,731)

(8,777)

Proceeds from issues of share capital


-

98

115

Dividends paid to ordinary shareholders


(1,254)

(1,101)

(1,823)

Interest paid


(50)

(178)

(189)

Net cash used in financing activities


(1,333)

(4,744)

(5,506)

Net (decrease) / increase in cash


(5,160)

(450)

4,934

Cash at beginning of the period


22,556

17,094

17,094

Exchange gains on cash


414

596

528

Cash at the end of the period


17,810

17,240

22,556

 



 

 

 

Notes to the Group Cash Flow Statement


Half Year to
31 Mar 2016
(Unaudited)

Half Year to
31 Mar 2015
(Unaudited)

Full Year to

30 Sep 2015
(Audited)



£'000

£'000

£'000

Profit before income tax


3,527

Adjustments for:





- Amortisation of acquired intangible assets


733

802

1,604

- Amortisation of other intangible assets


110

88

301

- Depreciation


1,428

1,355

2,715

- Loss on disposal of property, plant

   and equipment


-

-

508

- Share based payment obligations


319

220

485

- Finance income


(20)

(11)

(26)

- Finance costs


53

159

214

Total adjustments


2,623

2,613

5,801






Changes in working capital





- Inventories


220

(816)

(729)

- Trade and other receivables


(811)

(1,160)

(1,101)

- Trade and other payables


(2,648)

34

615

Total changes in working capital


(3,239)






Cash generated from operating activities


2,911

5,771

14,692

 

 

Reconciliation of net cash flow to movements in net cash



Half Year to
31 Mar 2016
(Unaudited)

Half Year to
31 Mar 2015
(Unaudited)

Full Year to

30 Sep 2015
(Audited)



£'000

£'000

£'000

(Decrease) / increase in cash in the period


(5,160)

(450)

4,934

Borrowings


-

(5,168)

(5,168)

Repayment of borrowings


29

8,731

8,777

Changes in net cash resulting from cash flows


(5,131)

3,113

8,543






Translation differences


121

92

99

Movement in net cash in the period / year


(5,010)

3,205

8,642






Net cash at start of period


17,328

8,686

8,686

Net cash at end of period


12,318

11,891

17,328



Analysis of net cash


At 1

 Oct 2015


Cash flow

Exchange movement

At 31 Mar

2016


£'000

£'000

£'000

£'000

Cash at bank and in hand

22,556

(5,160)

414

17,810






Debt due after 1 year

(5,189)

-

(293)

(5,482)

Finance leases

(39)

29

-

(10)

Net cash

17,328

(5,131)

121

12,318

 



Notes to the Interim Report

 

1.      Basis of Preparation

 

The unaudited Interim Report has been prepared under the historical cost convention and in accordance with International Financial Reporting Standards ("IFRS"), as adopted by the European Union.

 

The Interim Report was approved by the Board of Directors and the Audit Committee on 7 June 2016.  The Interim Report does not constitute statutory financial statements within the meaning of the Companies Act 2006 and has not been audited.  

 

Comparative figures in the Interim Report for the year ended 30 September 2015 have been taken from the Group's audited statutory financial statements on which the Group's auditors, PricewaterhouseCoopers LLP, expressed an unqualified opinion.  The comparative figures to 31 March 2015 are unaudited.

 

The Interim Report will be announced to all shareholders on the London Stock Exchange and published on the Group's website on 7 June 2016. Copies will be available to members of the public upon application to the Company Secretary at Dowlish Ford, Ilminster, Somerset, TA19 0PF.

 

The accounting policies adopted are consistent with those of the annual financial statements for the year ended 30 September 2015, as described in those financial statements.

2.      Application of IFRS

 

Adoption of new standards

 

During the current reporting period there were no new standards or amendments which had a material impact on the net assets of the Group. In addition, standards or amendments issued but not yet effective are not expected to have a material impact on the net assets of the Group.  However, the Group is closely monitoring the IASB projects on Contract Revenue recognition and the Lease accounting overhaul as they could potentially have a material impact on the Group's results.

 

3.      Estimates

 

The preparation of interim financial statements requires management to make estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expense.  Actual results may differ from these estimates.

 

In preparing these condensed consolidated interim financial statements, the significant judgments made by management in applying the Company's accounting policies and the key sources of estimation uncertainty were the same as those that applied to the consolidated financial statements for the year ended 30 September 2015.

 

4.      Financial risk management

 

The Company's activities expose it to a variety of financial risks, market risk (including currency risk, cash flow interest rate risk and price risk), credit risk and liquidity risk.

 

The interim condensed consolidated financial statements do not include all financial risk management information and disclosures required in the annual financial statements and should be read in conjunction with the Company's annual financial statements as at 30 September 2015.

 

There have been no changes to the risk management policies since the year end.

 



 

5.      Segmental analysis


Aerospace & Defence

Life Sciences

Industrial

Scientific Research

Corporate

Total

For half year to 31 March 2016

£'000

£'000

£'000

£'000

£'000

£'000

Revenue







Total revenue

8,064

3,941

27,365

1,592

-

40,962

Inter and intra-division

-

-

(2,601)

-

-

(2,601)

External revenue

8,064

3,941

24,764

1,592

-

38,361

Divisional expenses

(7,364)

(3,271)

(20,059)

(1,375)

(462)

(32,531)

EBITDA¹

700

670

4,705

217

(462)

5,830

EBITDA %

8.7%

17.0%

19.0%

13.6%

-

15.2%

Depreciation and Amortisation

(248)

(178)

(985)

(66)

(60)

(1,537)

Operating profit before amortisation of acquired intangible assets

452

492

3,720

151

(522)

4,293

Amortisation of acquired intangible assets

-

-

-

-

(733)

(733)

Operating profit

452

492

3,720

151

(1,255)

3,560

Operating profit margin %

5.6%

12.5%

15.0%

9.5%

-

9.3%

Add back non-recurring items

21

23

1,055

7

194

1,300

Operating profit excluding non-recurring items

473

515

4,775

158

(1,061)

4,860

Adjusted profit margin %

5.9%

13.1%

19.3%

9.9%

-

12.7%









Aerospace & Defence

Life Sciences

Industrial

Scientific Research

Corporate

Total

For half year to 31 March 2015

£'000

£'000

£'000

£'000

£'000

£'000

Revenue







Total revenue

10,314

4,317

25,421

2,001

-

42,053

Inter and intra-division

-

-

(3,108)

-

-

(3,108)

External revenue

10,314

4,317

22,313

2,001

-

38,945

Divisional expenses

(8,993)

(3,598)

(16,716)

(1,556)

(589)

(31,452)

EBITDA¹

1,321

719

5,597

445

(589)

7,493

EBITDA %

12.8%

16.7%

25.1%

22.2%

-

19.2%

Depreciation and Amortisation

(296)

(164)

(852)

(70)

(61)

(1,443)

Operating profit before amortisation of acquired intangible assets

1,025

555

4,745

375

(650)

6,050

Amortisation of acquired intangible assets

-

-

-

-

(802)

(802)

Operating profit

1,025

555

4,745

375

(1,452)

5,248

Operating profit margin %

9.9%

12.9%

21.3%

18.7%

-

13.5%

Add back non-recurring items

64

35

295

23

-

417

Operating profit excluding non-recurring items

1,089

590

5,040

398

(1,452)

5,665

Adjusted profit margin %

10.6%

13.7%

22.6%

19.9%

-

14.5%

¹EBITDA = Earnings before interest, tax, depreciation and amortisation.

All of the amounts recorded are in respect of continuing operations.

5.      Segmental analysis continued

 

Analysis of revenue by destination

 


Half year to

31 Mar 2016

(Unaudited)


Half year to

31 Mar 2015

(Unaudited)


£'000


£'000

United Kingdom

8,351


7,400

America

15,189


17,144

Continental Europe

8,687


8,128

Asia-Pacific

6,134


6,273


38,361


38,945

 

 

 

6.      Income tax expense

 

Analysis of tax charge in the period




Half Year to

31 Mar 2016
(Unaudited)

Half Year to
31 Mar 2015
(Unaudited)

Full Year to 30 Sep 2015 (Audited)



£'000

£'000

£'000

Current taxation





UK Corporation tax


448

562

1,480

Overseas tax


319

380

724

Adjustments in respect of prior year tax charge


-

-

(983)

Total current tax


767

942

1,221






Deferred tax





Origination and reversal of temporary differences


146

421

274

Adjustments in respect of prior year deferred tax


-

-

1,152

Total deferred tax


146

421

1,426






Income tax expense per income statement


913

1,363

2,647






 

The tax charge for the six months ended 31 March 2016 is based on the estimated effective rate of the tax for the Group for the full year to 30 September 2016. The estimated rate is applied to the profit before tax.

 



 

7.      Earnings per share

 

The calculation of earnings per 20p Ordinary Share is based on the profit for the period using as a divisor the weighted average number of Ordinary Shares in issue during the period.  The weighted average number of shares is given below.

 


Half Year to
31 Mar 2016
(Unaudited)

Half Year to
31 Mar 2015
(Unaudited)

Full Year to 30 Sep 2015
(Audited)


No.

No.

No.

Number of shares used for basic earnings per share

24,213,432

24,041,328

24,115,878

Dilutive shares

393,973

373,847

405,311

Number of shares used for dilutive earnings per share

24,607,405

24,415,175

24,521,189

 

 

A reconciliation of the earnings used in the earnings per share calculation is set out below:

 




Half Year to
31 Mar 2016 (Unaudited)

Half Year to
31 Mar 2015
(Unaudited)

Full Year to
30 Sep 2015
(Audited)


£'000

p per
share

£'000

p per
share

£'000

p per
share

Basic earnings per share

2,614

10.8p

3,737

15.6p

7,459

30.9p

Adjustments net of income tax expense:







Amortisation of acquired intangible assets

542

2.2p

593

2.5p

1,184

4.9p

Restructuring costs

165

0.7p

-

-

-

-

Fremont site move costs

653

2.7p

309

1.2p

891

3.7p

Abortive transaction fees

144

0.6p

-

-

-

-

Total adjustments net of income tax expense

1,504

6.2p

902

3.7p

2,075

8.6p








Adjusted basic earnings per share

4,118

17.0p

4,639

19.3p

9,534

39.5p

 

Basic diluted earnings per share

2,614

10.6p

3,737

15.3p

7,459

30.4p

Adjusted diluted earnings per share

4,118

16.7p

4,639

19.1p

9,534

38.9p

 

Adjusted earnings per share before amortisation and adjustments has been shown because, in the opinion of the Directors, it more accurately reflects the trading performance of the Group.  

 



 

8.      Dividend

 

The Directors have declared an interim dividend of 3.3 pence per share for the half year ended 31 March 2016.  This dividend has not been accounted for within the period to 31 March 2016 as it is yet to be paid.

 


Half Year to
31 Mar 2016
(Unaudited)

Half Year to
31 Mar 2015
(Unaudited)

Full Year to 30 Sep 2015
(Audited)


£'000

£'000

£'000

Final 2015 dividend paid : 5.2p per share

1,254

-

-

2015 Interim dividend paid : 2.6p per share

-

-

722

Final 2014 dividend paid in 2015 : 4.0p per share

-

1,101

1,101


1,254

1,101

1,823

 

 

9.      Borrowings

 

The group's banking facilities with the Royal Bank of Scotland comprise a committed revolving credit facility of $15m and an uncommitted flexible acquisition facility of $20m both available until 30 April 2019.

The revolving credit facility attracts an interest rate of between 0.9% and 1.8% above LIBOR dependent upon the Company's leverage ratio.

 

 

10.     Called up share capital

 


2016

No.

2015

No.

2016

£'000

2015

£'000

Allotted, issued and fully paid

Ordinary share of 20p each

 

24,260,024

 

24,062,036

 

4,852

 

4,812

 

 

 

 


This information is provided by RNS
The company news service from the London Stock Exchange
 
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